But Ballmer says improvements, including a new Surface and a new Metro Start Button, will win customers back

At a quarterly all-hands type meeting, Microsoft Corp.'s (MSFT) boisterous and ebullient CEO Steve Ballmer was more sedate than usual. While he raved about the upcoming next generation Surface tablet -- which was garnering rave reviews internally -- he also reportedly owned up to an unpleasant fact that Windows 8 isn't selling well.

Microsoft and Mr. Ballmer came under fire from some of their major partners. Samsung Electronics Comp., Ltd. (KSC:005930) blamed Microsoft for drooping PC (and by proxy semiconductor component) sales. Jun Dong-soo, head of the memory chip unit who sells DRAM and NAND to PC makers, called Windows 8 "less competitive" and complained, "[It is] no better than the previous Windows Vista platform."

Those are pretty harsh words coming from a major partner.

At the meeting Mr. Ballmer tried to convince employees that the free Windows 8.1 update would make up for the flop of its predecessor. He pointed to the return of a "Start Button" (although it's notthe Start Button you used to know) and the use of telemetry data to improve weak spots in Windows 8 as critical keys to the turnaround. He also discussed increasing spending on professional services (consulting), although the leaks from the meeting made it unclear whether Microsoft is looking to recruit outside consultation for itself or make money off providing it to others.

Ballmer thinks a new Metro Start Button will thrill Windows fans back to the ranks.

In the second calendar quarter Google Inc. (GOOG) ChromeBooks gained major ground on Windows PCs, establishing a beachhead of approximately 4-5 percent of total personal computer sales, and a quarter of <$300 USD personal computer sales. Some OEMs such as Samsung and Acer, Inc. (TPE:2357) (another prominent critics of Windows 8) have turned to Chromebook offerings, and may be eyeing dumping Microsoft entirely, shoudl consumers continue embracing Google's offerings and rejecting Microsoft's.

quote: Microsoft needs to stop trying to reinvent the wheel and just do what they do best: Make a dominant OS.

The problem is that making a dominant OS is now a thing of the past for Microsoft, a past that will almost certainly never return. Microsoft’s share of connected devices sales (in effect, PCs plus iOS and Android) collapsed from over 90% in 2009 to under 25% today and Microsoft's share is continuing to decline.

I think that Microsoft needs to do just the opposite of trying to be a dominant OS player and instead be what it was from the beginning, a software company. Make the best productivity software designed for touch and sell it on all platforms and sell enterprise solutions for deploying that touch based productivity software.

This is a good analysis of the hole that Microsoft is in and how it dug that hole itself.

You are right to point this out and yes you are a little confused, it relates to the importance of using the right metric to measure the right thing.

When confronted by crude device shipment estimates in the mobile device markets in order to understand what is the position, dynamic and trajectory of the various competing mobile platforms the issue of relative platform usage is very important. This is because unlike say the PC market, mobile device usage rates by individual owners seem to vary across a much wider spectrum. For example few people own a PC and never run any software programs on it, but quite a few smart phone owners seem to do just that, they just use their phones as phones and not as computing platforms. So measuring the patterns and the scale of actual usage of smart phones as computing platforms is indicative of a real and significant phenomena that does tell us something informative about relative platform strengths. Without some way to measure platform usage the the device shipment figures tell us very little about relative platform performance so we need other metrics, of which web use is one, to tell us something about what is going on.

When considering the position, health and trajectory of the Windows platform we already have some very important data, PC sales have been falling for quite some time now and this is an entirely new phenomena in the PC market. Something is happening to the PC market but the question is what? Is it short term market softness caused by, say, the state of the global economy, or is it the result of some more profound shift? So what is the best sort of metrics to throw light on this question?

It's true that one can look at web usage and say, based on that metric, that Windows is absolutely dominant and everything is fine in the house of Microsoft. But we already know that is not true, we already know that PC sales are falling, we know that PC OEMs and Microsoft are very concerned, we also know that PC OEMs (and by implication Microsoft also) are pointing the finger at the rise of the mobile device, in particular tablets but also the smart phone. We also know that relatively very few mobile devices have been sold that run an OS from Microsoft.

So what metric is useful in judging the impact of the rise of non-Windows mobile devices on the overall balance and shape of the broad computing market. One way is to just add up connected devices (PCs, phones, tablets) and see if there have been pronounced or rapid changes in the balance between the Windows and all the non-Windows devices. And that's what we find, we find that Microsoft’s share of connected devices sales (in effect, PCs plus iOS and Android) collapsed from over 90% in 2009 to under 25% today and Microsoft's share is continuing to decline.

The response to all this (obviously other than scoring cheap and inane debating points) might be, lets use the web usage metric anyway which tells us everything is great for Windows but which unfortunately cannot explain anything about the decline in PC sales. Or we can use other metrics, such as the changes in the balance of connected devices, which does seem to shed quite a bit of light on the underlying causes of Windows malaise.

There is no one metric to rule them all, measuring something (assuming the data is accurate) can be informative in one setting when asking one sort of question, and not informative in another setting or when asking another sort of question.

You might as well come out and say "information is only important when it proves my points. When it proves your points it isn't relevant"

That is just pure bassackwards fanboy logic failure... MS is still the worlds most dominant OS by a long shot. Web traffic beats all other plartforms, including mac, ios, android, linux and all others combined by a 5 to 1 margin. The whole world runs off it. When the day comes where they can make a Mac, iPhone, iPad, or iPod without the entire factory and supply chain running off Windows then call me.

If you look carefully at that graph, you will notice a trend that almost every commentor has either stated or hinted at: desktop operating systems are declining, mobile OSes are rising. The two desktop operating systems on the graph, "Windows" and "Mac", both declined over the time period covered. Not once, in the entire time frame, did the percentage of users of either of those OSes exceed the value they started with. On the other hand, Android and iOS both improved over the time frame.The next point is "Windows" covers quite a range of operating systems, it could meaning anything from Windows 98 through to Windows 8. The fact is "Windows XP" (37%) is currently the second placed desktop OS, with Windows 7 (44%) being first. The importance of this is that 37% of users are using an OS that is famous for its insecurity and will soon not be supported by the manufacturer.Since these are people where, at the very least, XP is adequate, and quite likely the hardware is also adequate, when they are forced to upgrade they will be looking for something that is a bit cheap that covers the basics such as browse the internet, read some newspapers and blogs, do some emails, stuff which doesn't require a high powered computer running the latest Windows OS. They are perfect targets for Android, iOS, and e-readers like Kindle.Notice something there? None of those aren't made by Microsoft. Sure, Microsoft gets there cut, but that misses another important point: every time Microsoft get a patent licence fee that is a sale they didn't get, and that is a lost customer.http://www.netmarketshare.com/operating-system-mar...

The change is that the world has changed. The Microsoft that got to be number 1 isn't the Microsoft of today, and that is what Tony was talking about.When Microsoft became Number 1 it was because they saw that a windows environment was the way to go and worked really hard to make better software than anyone else that worked in the windows environment OS they created.Now, the management has changed from a company that sees the future and runs towards it, to one that wants to try and hold onto the past.

I agree microsoft has made a lot of bad moves lately. They are declining. But they are still number one by a huge margin. It's going to take a long long time before that changes. The entire business world still runs on Microsoft. Like I said call me when they can make a single Mac iPod iPhone or iPad without the entire process running on PC. If anyone can do it Apple can, and they are not even close. The massive infrastructure just doesn't exist anywhere outside of Microsoft. there is Unix, Linux, and several companies that all do their own tiny little piece but no one else does the whole package. No one else has even started to attempt to think about making a try at it.